Income Tax Notices: The Income Tax department has carried out raids across several states on entities allegedly involved in bogus political donations. Heavy bogus donation to various regional political parties has been detected during search & survey operations against RUPP (Registered Unrecognized Political Parties). More than 20 registered unrecognised political parties in Ahemdabad city of Gujarat itself suspected of laundering cash received in the guise of donations, thereby evading tax. Income Tax notices are issued to all donors and donees.
Why people do Political donation?
Both individuals and companies can claim deduction on 100% of the amount donated by them to a political party under Section 80GGC and 80GGB respectively. The entire contribution is allowed for a tax deduction if it is not more than the taxable income of the eligible taxpayer.
Section 80GGB
As per Section 80GGB of the Income Tax Act, 1961, any Indian company or enterprise that donates to a political party or an electoral trust registered in India can claim a deduction for the amount contributed.
Section 80GGC
Section 80GGC of the income tax permits an individual to claim a tax deduction for any donations or contributions made towards any political party. So, if you opt for such tax deductions, you have the opportunity to save a good portion of income tax under Section 80GGC apart from other exemptions such as medical allowance, house rent allowance, etc.
Many have misused the above section for showing the donations in their ITR, however in reality no actual outflow occurred, in this way taxpayers were skipping the liability of tax payable under Income tax.
Why Income Tax notices for political donation?
Many political parties are involved in the activity of providing accommodations entry by way of accepting bogus donation which were routed through various intermediaries and subsequently returned to donors in the form of cash/RTGS/NEFT or other banking channels, after charging a commission of 5 to 10% of the amount donated.
These parties are solely created with the purpose of facilitating bogus claim of deduction under section 80GGC / 80 GGB by soliciting donations which are thereafter returned to donors in cash or through electronic means in lieu of commission earned by the key persons as well as the intermediaries.
In light of above, all the beneficiaries are receiving the donations.
List of political parties on which raid operations are conducted
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